Question

Why might the use of a tariff to decrease aggregate unemployment in a country eventually generate...

Why might the use of a tariff to decrease aggregate unemployment in a country eventually generate an increase in aggregate unemployment in that country?

Homework Answers

Answer #1

Tariff is a tax that the government of a country imposes on import of particular goods or services in the country. This increases the cost of the imported goods and services.

The aim of imposing tariff is to reduce the amount of import and to protect the domestic producers from the foreign competition. This aims to increase production and reduce unemployment.

But with the imposition of tariff, the amount and choices of goods available in the country reduces for the consumers. This results in reduction of expenditure and further the income of the producers. So ultimately it leads to increase in the rate of unemployment in the country.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Why might a foreign export subsidy decrease welfare in the foreign country? Why might the foreign...
Why might a foreign export subsidy decrease welfare in the foreign country? Why might the foreign country provide such a subsidy despite the adverse welfare effect?
Why might a foreign export subsidy decrease welfare in the foreign country? Why might the foreign...
Why might a foreign export subsidy decrease welfare in the foreign country? Why might the foreign country provide such a subsidy despite the adverse welfare effect?
Unemployment would increase and prices would decrease if A. aggregate demand shifted left B. aggregate demand...
Unemployment would increase and prices would decrease if A. aggregate demand shifted left B. aggregate demand shifted right C. aggregate supply shifted left D. aggregate supply shifted right
question 30 An export tariff is when a country requires that only a specific amount of...
question 30 An export tariff is when a country requires that only a specific amount of a good (say, 50,000 units) be exported. is not used by the American government. is an example of specific tariff. may hurt consumers in the country that imposes the export tariff. 31 If Mexico reduces its tariffs on imports, it will result in: An increase in imports but a decrease in domestic production A decrease in imports but an increase in domestic production An...
To fight inflation, the government may a. decrease aggregate demand, which will also lead to lower...
To fight inflation, the government may a. decrease aggregate demand, which will also lead to lower unemployment rates. b. decrease aggregate demand, which will also lead to higher unemployment rates. c. increase aggregate demand, which will also lead to lower unemployment rates. d. increase aggregate demand, which will also lead to higher unemployment rates.
2. Suppose a small country like Gambia imposes a tariff on its imports of Cloth from...
2. Suppose a small country like Gambia imposes a tariff on its imports of Cloth from the USA. A. What will happen to domestic price of cloth in the Gambia? Will it increase or decrease? Explain why? B. Who will be happy with the imposition of the tariff on imports domestic consumers or domestic producers in Gambia? Explain why? C. Why will the government of Gambia be happy with the imposition of the tariff? Explain, why?
32.   The economy is experiencing substantial short-run unemployment.  The long-run aggregate supply curve is ___________.  In the long run,...
32.   The economy is experiencing substantial short-run unemployment.  The long-run aggregate supply curve is ___________.  In the long run, there will be _________ in the aggregate price level. A.   horizontal, an increase B.    horizontal, a decrease C.    vertical, an increase D.   vertical, a decrease 33.   The less sensitive households are to changes in interest rates, ______________, for a given increase in the aggregate price level. A.   the more the aggregate demand curve will shift to the left B.    the less the aggregate demand curve will shift to the left C.    the...
In March 2013 the Fed announced that it might decrease its open market purchases of securities...
In March 2013 the Fed announced that it might decrease its open market purchases of securities by the end of the year. This announcement suggests that the Fed is concerned that a. the unemployment rate will increase. b. the inflation rate will rise. c. the federal funds interest rate will fall too low for the Fed to control it. d. the federal funds interest rate will rise too high for the Fed to control it. In the aggregate supply-aggregate demand...
As described in the chapter, the Federal Reserve in 2008 faced a decrease in aggregate demand...
As described in the chapter, the Federal Reserve in 2008 faced a decrease in aggregate demand caused by the housing and financial crises and a decrease in short-run aggregate supply caused by rising commodity prices. a. Starting from a long-run equilibirium, illustrate the effects of these two changes using both an aggregate-supply/aggregate-demand diagram and a Phillips-curve diagram. On both diagrams, label the initial long-run equipibrim as point A and the resulting short-run equilibrium as point B. For each of the...
True or False: The imposition of an import tariff by a large country can cause an...
True or False: The imposition of an import tariff by a large country can cause an increase in the country’s welfare. When demand increases for a good subject to a quota the price would stay the same but imports would increase. Is true or false?why? thanks